RBS review 'urges regulator powers'

Friday 9 December 2011 09:05 BST

The two-and-a-half-year investigation into the demise of RBS is due to be published on Monday

A review into the failure of Royal Bank of Scotland will recommend that regulators should be given greater powers to block hostile bank takeovers such as the ABN Amro deal that brought down the bank, it has been reported.

The two-and-a-half-year investigation into the bank's demise, which is due to be published by the Financial Services Authority (FSA) at 6am on Monday, also raises the prospect of bank directors being forced to prove their innocence in the event of a future bank failure, Sky News said.

However, the FSA will confirm that it does not intend to pursue any new enforcement action against any of RBS's former directors, who included the former chief executive Sir Fred Goodwin.

The regulator said last December that it found no evidence of fraud or dishonest activity in the lead-up to the crisis, although it said the bank made a series of bad decisions, most notably the acquisition of the Dutch bank and the aggressive expansion of its investment banking business.

Those findings a year ago led to pressure for the FSA to make public its key findings, which it plans to do next week.

The report, which is said to run to nearly 500 pages, is expected to include a recommendation that banks should gain regulatory approval for significant acquisitions and possibly also obtain independent advice about such deals.

The FSA is reported to outline six principal reasons for the downfall of the bank, which is now more than 80% owned by the UK taxpayer. They include an excessive reliance on riskier short-term funding and inadequate due diligence which paved the way for RBS and its consortium partners to carry out their £50 billion ABN Amro takeover.

The regulator also highlights a potential further contributing factor in that the bank had specific problems with its management style, governance and culture, Sky News added.